(The Center Square) – A decades-old loan program for affordable housing developers comes with little documentation to track the taxpayer funding it gives out.
That means at least 24 loans given between 2022 and 2024 have not yet been billed for repayment, while it was unclear if the applicants behind some of the projects even had the money to do so.
The information was revealed in an audit of the Pennsylvania Housing Financing Agency’s PennHOMES program, which receives most of its funding from the federal government. It was the first time since the 1980s that the agency underwent any kind of financial review, despite loaning out $25.9 million in two years alone to developers that agreed to build and lease homes for low-income and disabled tenants.
State Rep. Kristin Marcell, R-Richboro, who championed the state audit, said it confirmed what she had long worried about – lackadaisical oversight of public money meant to support unprivileged communities.
“No matter how worthy a program, it is still taxpayer dollars funding it and those dollars needed to be managed responsibly,” she said. “This audit proves that PHFA is failing in that responsibility at a time when taxpayers need more confidence their dollars are being well-managed than ever before.”
PHFA is an acronym for the Pennsylvania Housing Finance Agency.
In the audit, which examined 39 applications submitted between 2022 and 2024, the state auditor general concluded that, despite finding nothing unscrupulous about the money awarded through PennHOMES, many notes that detail decisions made by the agency were written down and later destroyed, rather than transferred into an electronic filing system.
The process, according to the report, was underpinned by the risk of unknown factors influencing loan approvals and could be fixed through improved record-keeping.
In a review of 46 properties – out of 176 in total – the audit found that repayment bills were not sent for more than half, while another project received funding despite staff recommendations against it. Inaccurate rent and income data were uncovered in records for six properties.
The agency, in its response to the audit, said it was transferring to a new digital tracking system that would be operational by the end of the year. It did not address other recommendations.
“Fifty-eight percent of loan recipients were not even asked to pay back their loans. This is inexcusable and ridiculous,” Marcell said. “Taxpayers are not a bottomless pit of money for government bureaucracy to waste but that’s exactly what happens when agencies like PHFA cannot and do not manage programs as they are supposed to.”
The report came out just two days before Gov. Josh Shapiro launched his new affordable housing action plan, which is meant to speed up construction and make homeownership within reach for at least 1 million households.
According to the administration’s estimates, Pennsylvania will be short 185,000 homes by 2035, creating greater housing instability and more homelessness. Many of the plan’s goals center on streamlined regulations and greater support for low-income residents and were developed in part from feedback from the housing agency.
Marcell and other Republicans first raised concerns about the agency during the last legislative session after it disbursed only $54 million of a possible $175 million for rental and mortgage assistance in 2020. In 2021, it received $350 million from the American Rescue Plan for a homeowners’ assistance grant program, but the program was shut down for more than a year due to technical issues.
At the time, the agency blamed the contractor it chose for botching its mortgage relief program.
“This audit covered only a tiny sliver of the agency and they found these significant issues,” Marcell said Tuesday. “Yet, PHFA has still not yet responded to the audit as requested. This should concern every taxpayer who is footing the bill for these programs, and I look forward to hearing the agency’s response and how they plan to address these issues now and in the future.”
Pennsylvania isn’t the only state to have some trouble with its housing agency.
A report from the Government Accountability Office in 2023 found that the risk of fraud was high in the nation’s largest federal housing program due to a lack of audits and “weak control mechanisms.”
The Washington D.C. Housing Authority has faced allegations of conflicts of interest and voucher fraud in recent years and is years behind on turning in audits to the federal government. In North Carolina, authorities discovered that $3 million was stolen from the state housing agency. And in Oregon, the state had sent out almost $500 million in emergency rental aid, but the housing agency couldn’t verify the money was used properly.
Anthony Hennen contributed to this report.
